Bitcoin Vs. Ethereum: Which is a Better Investment?

Following bitcoin's stomach-churning price drop,  where more than $6,000 in coin value was lost in the span of a month, investors are beginning to think more seriously about diversifying their cryptocurrency portfolios. In the last year, many of bitcoin's would-be competitors have stolen market share from bitcoin, with the trend unlikely to change in 2018.

As part of a continuing series, we will compare bitcoin with the coins that are seeking to displace bitcoin as king of the hill. In this article, we will be looking at Ethereum.

The first programmable altcoin, Ethereum sought to create an altcoin where the developer can determine the use of the blockchain and create an ecosystem suitable to his or her needs without needing to rely on the limits in data transcribing and third-party access that bitcoin offers. Ethereum differs from bitcoin by having a native coin that can be programmed into a smart contract,  an autonomous agent capable of conducting transactions without the need of a third party,  and by offering a virtual computing space where decentralized applications or "Dapps" can operate on the blockchain.

These differences have made Ethereum the preferred altcoin of the fintech world. An increasing number of companies are building applications to utilize Ethereum's unique plasticity, making the blockchain's future usefulness obvious. However, as Ethereum has no monetary value on its own, the question of whether Ethereum is a better investment option than bitcoin is an open one.

Tales of the Tape (as of January 28, 2018)

	Bitcoin	Ethereum
Purpose of   coin	Proof-of-concept for altcoin model; digital currency	Programmable platform and agent for customizable transaction systems
Governance	Decentralized; overseen by not-for-profit foundation; decisions determined by a democratic vote among nodes and miners	Decentralized; overseen by not-for-profit foundation; decisions determined by consensus among nodes and miners
Number of coins	21 million; 16.83 million mined	No set maximum, although the supply is not unlimited (The system's decreasing genesis of coins will eventually hit equilibrium with the system's coin   destruction, resulting in zero growth.) ; currently, 97,275,665.59 Ethers (This is determined by reverse inflation of   coin genesis from year-to-year.)
Market   capitalization (as of January 28, 2018)	$198.37   billion	$117.96   billion
Obstacles to success	Changes difficult to achieve; slow transaction times; high transaction fees	Potential  development of proprietary fintech blockchain solutions
Transaction time (average)	1,570 minutes  (one day, two hours, and ten minutes); seven-days high: 11,453 minutes (seven days, 22 hours, 53 minutes); current transaction fee: $9.824; transactions expedited by paying miners	Less than fifteen seconds, depending on whether is enough gas available to complete the transaction; current average transaction fee: $1.19; median transaction fee: $0.50
Reason for success	As the first digital coin, there is a sense that bitcoin must succeed for the industry to succeed. With many of bitcoin's "imitator" coins being tied to bitcoin in an irrevocable way, there is a "we all succeed or we all fail" mentality currently in place.	The ease with which Ethereum can be applied to custom distributed ledger solutions makes the platform both desirable and easily-manageable. Also, the Ethereum community takes to change and adaption faster than the bitcoin community.

Understanding Ethereum

Ethereum was created to address key perceived deficiencies in the bitcoin code. Among these are the block size, the number of coins, and the ease in programming platform coins and applications that function in the same virtual space as the blockchain. 

While it took Ethereum more than five years to reach relevance against bitcoin, Ethereum currently has four times the daily transactions as bitcoin. Bitcoin remains king in conveying wealth but pales to Ethereum's potential for scripting data storage over a distributed network. This gives Ethereum extreme usability to, say, a retail store that is looking for a way to upgrade its inventory and sales platform, such as what Walmart is doing with Ethereum. This is one of the reasons why there are more Ethereum-based ICOs than bitcoin-based ones.

With Ether, Ethereum's native coin, predicted to reach $5,000 in 2018, Ethereum is an investment to consider. However, it is worth remembering that Ethereum and bitcoin are not necessarily comparable and that assessments between the two should reflect the uniqueness of both coins.

Are you thinking of investing in the world of New Finance? Read Bitcoin Market Journal and learn to invest like a pro!